Advertising, Connected TV

OTT Advertising: What Is It and How Does It Work? (2024)

This is your compendium of all things OTT advertising for 2024. From benefits and best practices to measuring campaign success, we’ve got you covered.

OTT Advertising: What Is It and How Does It Work? (2024)

19 Min Read

As the digital landscape evolves, OTT advertising has emerged as a potent tool for marketers aiming to reach audiences directly on their streaming content platforms.

Over-the-top ads, cutting through traditional broadcast methods, allow for targeted, personalized advertising beyond the constraints of conventional TV. This article delves into the intricacies of OTT advertising, exploring how it works in 2024 and why it’s becoming an indispensable part of modern digital marketing strategies.

What is OTT Advertising?

Over-the-top (OTT) advertising refers to the delivery of ads via streaming media services that are directly offered to viewers over the internet, bypassing traditional cable, broadcast, and satellite TV platforms.

Leveraging advanced targeting and interactive ad capabilities, OTT advertising offers advertisers the opportunity to reach specific audience segments viewing content on devices like smart TVs, computers, and mobile devices, providing detailed analytics for measuring effectiveness.

This content isn’t limited to TV only, but on any device that runs on an internet connection:

  • Mobile
  • Desktop
  • Tablet
  • Laptop

OTT content is at its most optimum – from a branding and performance perspective – when viewed on TV in the comfort of your living room, but more about that later.

OTT vs Connected TV (CTV)

What Is the Difference Between OTT and CTV? CTV (Connected TV) is a device that is connected to the internet and allows users to access OTT content on a television set. While OTT is the method of delivering video content, CTV is the device used to consume the content. CTVs include smart TVs, streaming devices, and gaming consoles, among others.

For a more in-depth comparison, learn about the difference between OTT vs. CTV advertising.

OTT vs Video on Demand (VOD)

What Is the Difference Between OTT and VOD? VOD (Video on Demand) is a service that allows viewers to select and watch video content on demand at their convenience. The main difference between VOD and OTT is that OTT is a method of content delivery, while VOD is the type of content delivered. We’ll discuss the various types of VOD in more detail below.

Benefits of OTT Advertising

OTT advertising is a game-changer. It bridges the gap from being a pure branding exercise (on Linear TV) to one that can also be measured and tracked.

Some of these marketing platforms pride themselves on their data-driven approach, while others claim to be at the forefront of precision targeting. MNTN addresses all of the concerns a performance marketer may have, packaged in a single user interface.

The primary benefits of OTT advertising include the following.

1. Raises the Bar for Creative and Content Delivery

Three words: Living Room Quality.

We acknowledge that OTT isn’t only limited to TV, but across other internet-connected devices as well. However, LRQ serves ads exclusively on TV devices as we know that this device is superior to other devices in terms of ad experience. If you’re working with an ad platform that serves OTT ads across other devices, you’re missing out on the true benefits of this ad channel.

MNTN Living Room Quality serves 15 or 30-second non-skippable ads to deliver a premium ad experience.

US Connected TV (CTV) Household Penetration, 2014-2023 (% of total TV households)

2. Brand Safe, Fraud Free, and Top Tier Inventory

Serving any advertisement on low-quality inventory dilutes the impact of even the most compelling of advertisements – and is a huge waste of marketing dollars. A sweeping majority of advertisers agree that this is a huge concern of any brand, too:

Challenges with Porgrammatic Advertising According to US Digital Media Professionals, July 2022 (% of respondents)

We’ve selected only premium TV networks that we know are aligned to your brand, and your audience and specifically hand-picked to drive performance. These are 125+ reliable networks that we’ve all grown to know and love, like CNN, CNBC, Food Network, and more.

3. Targeting and Tracking

Where over-the-top advertising shines is in its reporting and OTT targeting capabilities.

We’ve created technology that goes beyond traditional TV targeting and matches you with consumers who will love your brand and take action — all to help you drive the best outcomes. You can also use first-party data from your own website visitors and reach them with retargeting ads on their other devices and OTT.

View the reports and analytics for these as they happen in real-time on our reporting dashboard – better yet, see how these perform in relation to your other digital marketing efforts through our integration with Google Analytics to get a holistic view of your campaign.

You can track metrics from your OTT advertising efforts on platforms like MNTN, including:

  • How many people viewed your advertisement?
  • How many viewers visited your website after viewing your advertisement? 
  • Which OTT device is driving more view-through conversions?
  • What does a typical user journey look like from the top of the funnel through to the bottom of the funnel – across OTT, other OTT-supported devices, and my other digital marketing channels in this campaign? 

These performance metrics and KPIs can all be viewed on our reporting interface, and in any permutation to show those metrics that matter most to your brand.

How Does OTT Advertising Work?

There are several steps involved in the OTT advertising process. Here is a high-level overview of what you can expect:

  • Planning: Start by understanding your target audience – who they are, their preferences, viewing habits, geographical locations, and more. This will help you plan your OTT advertising campaign more effectively.
  • Creating Content: The next step involves creating engaging and relevant content that would appeal to your target audience. This could be commercials, promotional videos, or short clips.
  • Selecting OTT Platforms: OTT platforms are the places where your ads will be displayed, such as Hulu and Roku. Using an advertising platform like MNTN Performance TV will allow you to display your ads across a variety of similar ad-supported streaming services.
  • Purchasing Ad Space: Once you’ve chosen your platform(s), you need to buy ad space. This can be done directly through the platform, or through programmatic advertising which uses AI to automate the buying, placement, and optimization of media inventory.
  • Segmenting Your Audience: With OTT advertising, you can get very specific with who sees your ads. You can segment your audience based on their interests, behaviors, or demographic information.
  • Setting up the Campaign: Once you’ve purchased ad space and segmented your audience, it’s time to set up the campaign on the OTT platform. This involves scheduling when and where your ads will appear.
  • Launching the Campaign: Once everything is set up, your campaign is ready to be launched. Your ads will now start appearing on the OTT platform(s) to your target audience.
  • Monitoring the Campaign: Keep track of how your campaign is performing. This could involve keeping an eye on key metrics like view-through rates, click-through rates, and conversion rates.
  • Optimizing the Campaign: Based on the performance of your campaign, you may need to make adjustments. This could involve tweaking the ad content, adjusting the scheduling, or refining your audience segmentation.
  • Reporting: After the campaign has run its course, it’s important to put together a comprehensive report that outlines the success (or otherwise) of the campaign. This report can be used to inform future campaigns.

OTT advertising, when served on television screens, works like any other direct response channel – except with the immersive experience unique only to television.

We delve into this further in the section below, but platforms like MNTN and other OTT advertising platforms like MNTN Performance TV (that serves exclusively on TV screens and not other devices) let brands set up audience targeting, measure who is viewing an advertisement, and then view how this stacks up against their other digital marketing efforts.

It also works cross-device, meaning that the platform tracks users visiting your brand’s website after viewing OTT ads until they finally convert on your website.

MNTN Performance TV offers superior reporting capabilities which track ad-side metrics like ad completion and website visits, as well as the popular measures of ROI including ROAS, CPV, and conversion rate. These benchmarks are a critical component for measuring the success of your OTT campaign.

Types of OTT Ads

There are many ways that OTT ads can be delivered through streaming media over the internet. The most common types of OTT ads are:

  • Pre-roll ads: These are short ads that appear before the main content begins. They are usually 15-30 seconds long.
  • Mid-roll ads: These ads appear in the middle of the content, typically after a certain amount of time has passed. They are usually longer than pre-roll ads and can range from 30 seconds to a few minutes.
  • Post-roll ads: These ads appear after the main content has ended. They are often longer than pre-roll ads and can range from a few seconds to several minutes.
  • Banner ads: These are small ads that appear at the bottom or top of the screen during the content.
  • Overlay ads: These are ads that appear on top of the content, but do not interrupt the viewing experience. They are often clickable and can lead to a landing page.

OTT advertising provides a range of options for brands to reach viewers through streaming media. Each type of ad has its own advantages and can be used in different ways to engage audiences and drive results.

Types of OTT Platforms

There are also several OTT platforms (or business models) that provide streaming content directly to consumers. Some of the most common types are SVOD, AVOD, TVOD, and PVOD.

Subscription-based Video on Demand (SVOD)

Subscription-based Video on Demand (SVOD) is a type of streaming service where users pay a recurring subscription fee to access a library of video content, including TV shows, movies, and original content. SVOD platforms offer users unlimited access to their content library without any commercial interruptions.

Examples of SVOD platforms include Netflix, Hulu, Amazon Prime Video, and Disney+.

Advertising-based Video on Demand (AVOD)

Advertising-based Video on Demand (AVOD) is a model of delivering video content over the internet, where the content is free to viewers, but revenue is generated through advertising. In this model, the viewer does not have to pay for the content but is subjected to ads during playback. The revenue generated from the ads is used to support the production and distribution of the content.

Examples of AVOD platforms include YouTube, Crackle, and Pluto TV.

Transactional Video on Demand (TVOD)

Transactional Video on Demand (TVOD) is a type of video-on-demand service that allows viewers to access content on a pay-per-view basis. With TVOD, viewers can rent or purchase individual movies or TV shows, and typically have a set period of time to watch the content before it expires. TVOD is often used for newer releases that are not yet available on subscription-based services, as well as for one-time events like concerts or sporting events.

Examples of TVOD platforms include Amazon Prime Video, iTunes, and Google Play.

Premium Video on Demand (PVOD)

Premium Video on Demand (PVOD) is a video distribution model where viewers can rent or purchase movies or TV shows that have just been released to home entertainment platforms before they are available on subscription-based video on demand (SVOD) or traditional physical media like DVDs or Blu-ray discs.

PVOD enables consumers to access high-quality video content from the comfort of their own homes without having to go to the cinema or wait for the content to be available on other platforms. Typically, PVOD titles are available to rent for a limited time period, usually 48 hours, at a premium price point, which is often higher than the cost of renting the same title through traditional video-on-demand (VOD) platforms.

Types of OTT Devices

There are several popular OTT devices used to access streaming media, including TV, mobile, desktop, tablet. Where the ‘OTT’ definition comes into play is that the content being streamed on these devices are going “over” via internet connection.

  • Amazon Fire TV Stick: A small device that plugs into an HDMI port on your TV and provides access to various streaming services, including Amazon Prime Video, Netflix, Hulu, and more.
  • Roku: A streaming device that connects to your TV via HDMI and provides access to numerous channels and streaming services.
  • Apple TV: A device that allows you to stream content from services like iTunes, Netflix, and Hulu, as well as access live TV and sports.
  • Google Chromecast: A small device that allows you to stream (or cast) content from your phone or computer to your TV.
  • Smart TVs: Many new TVs come with built-in streaming capabilities, allowing you to access content without needing an additional device.
  • Gaming consoles: Gaming consoles like Xbox and PlayStation also offer streaming services, allowing you to access content through your console.

These are just a few examples of the most popular OTT devices available on the market.

Is OTT Advertising Effective?

We created an entire content series dedicated to this very topic, comparing the effectiveness of OTT advertising to well-known players in the programmatic space like YouTube, Demand Side Platforms (DSPs), Linear TV, Display-Only, and Video Ads.

Apart from the inventory, tracking, measurement, and overall experience benefits – attribution is a priority for performance marketers and they should be wary of how this is measured on other OTT ad platforms

What Are the Top Challenges Among B2B Marketers Worldwide? (% of respondents, Jan 2022)

A legitimate performance marketing channel should be as transparent as possible, and MNTN Performance TV addresses this need through its accurate attribution capabilities via its proprietary Verified Visits™ feature.

Verified Visits™ is our proprietary technology that measures any user visits to your site following the guaranteed in-view display of your ads, in a window of time defined by you. That means you’ll know when someone views your OTT ad to completion, and what device they use to convert. And since it only takes credit if the original ad was viewed to completion, it ensures it was your ad that initially prompted the sales journey.

What Types of Results Can I Expect from OTT Advertising?

Results you can expect from running ads on OTT inventory may vary depending on budget, type of industry, and time of year. However, you can expect to see performance gains across the board—take some of these results that we’ve seen on our performance marketing platform for starters:

  • 48% higher ROAS with MNTN Performance TV Retargeting: We partnered with a leading home supply retailer to level up their retargeting efforts. They had originally only used display-retargeting, but this time served related ads across web and mobile to recent site visitors—as well as to viewers who had seen their Performance TV ad. The combination of multiple platforms of devices drove site visits more efficiently than display-retargeting and outperformed not only on ROAS but on Cost Per Visit and Conversions.
  • 20% higher revenue versus one of our top competitors: Some friendly rivalry never goes astray, especially when we come up on top. A luxury e-commerce retailer approached us for some support with their retargeting efforts, and we did a head-to-head test with one of our competitors to see which one performed better. We drove 20% higher revenue at comparable spend levels, drove 6x longer average session durations, and a 680% higher e-commerce conversion rate – in fact, the retailer had to end the test two weeks early as we generated results much faster than anticipated.
  • 50% lower CPA with MNTN Performance TV Retargeting: A leading non-profit education institution has been an ongoing customer of ours, and usually relied on our retargeting solutions to drive enrollments and student applications. However, they wanted a new way of getting in front of a wider audience pool, so added on our MNTN Multi-Touch feature to ensure their ads were top of mind. This happened to be their best performing campaign since launch and drove the lowest CPA (Cost Per Acquisition) compared to their display-only retargeting campaigns, and cut their total average CPA by 50% across all their retargeting efforts.

Are OTT Ads Vertical Specific?

Nope, OTT marketing is entirely vertical agnostic and benefits many categories. We have worked with global movie studios looking to drive brand awareness for their latest releases, through to retailers and F&B (food and beverage) brands. Any brand with a website or online presence to drive traffic is a suitable candidate.

Nowadays, the majority of consumers go ‘straight to the source’ and buy direct from brands. This, combined with the fact that 87% of households now own an OTT device, is a compelling case for OTT advertising.

These consumers are digital natives at heart and are used to consuming information (and purchasing) cross-device, which is one of the reasons why so many advertisers show interest in it as a marketing channel.

How Do You Advertise on OTT?

As long as you have your ads created within the right specifications, then you’re ready to launch your OTT campaign in four simple steps: 

  1. Upload your ad creative
  2. Set your targeting parameters
  3. Make your campaign memorable through related ads across your other devices to keep your brand’s message top of mind
  4. Choose your budget, campaign goals, and launch date

What Types of OTT Campaigns Can You Run?

Pick your poison – prospecting or retargeting? Whichever OTT campaign strategy you choose, MNTN Performance TV offers a solution for both:

  • Performance TV Prospecting: Reach new customers by tapping into thousands of audiences available through our unique integration with data providers.
  • Performance TV Retargeting: Use your own first-party CRM data to retarget users who are interested in the brand by serving them OTT ads.

How Do I Buy OTT Ads?

OTT ads can be bought in two ways:

  1. Direct-buy through a publisher: Otherwise known as “walled gardens”, which are closed ecosystems (such as Amazon Prime Video), which control their own operations and are priced as a set fee.
  2. Programmatic buys: These are real-time bids across a network of OTT advertising inventory and are usually priced lower than a direct buy. For example, when you set up a campaign with MNTN Performance TV, the software will automatically place these bids on your behalf across our network of 125+ premium publishers, but also ‘choose’ these based on your targeting parameters to efficiently spend your ad dollars and drive value.

If you’re looking for a combination of flexibility and value without having to sacrifice (or worry about) where your content will end up, programmatic advertising is a wise choice.

What Is the Cost of OTT Advertising?

Streaming TV advertising on OTT platforms is a great way to reach an audience migrating away from traditional linear television in a more cost-effective manner. Traditional TV advertising requires a large upfront commitment which significantly limits the number of businesses participating.

On the other hand, OTT ads can be purchased on a month-to-month basis, giving users the freedom to spread out ad dollars across multiple campaigns seeking different outcomes.

In addition, your dollars will go much further on OTT, compared to cable TV advertising, when it comes to reaching specific audiences. With targeting options and conversion tracking that go far beyond the simplicity of linear, it’s easy to see why performance marketers are shifting their ad spend to Connected TV and OTT.

OTT Metrics and Measurement

At its heart, OTT advertising is a digital ad medium, and it leverages traditional digital marketing metrics and KPIs for performance assessment. Here are some crucial ones that everyone, especially those who intend to use OTT ads for performance marketing initiatives, should be familiar with.

  • Ad Impressions: A count of the total ads shown to viewers, reflecting the reach of your campaign.
  • Return on Ad Spend (ROAS): An important metric showing the ratio of revenue earned to total ad spend in your campaign.
  • Cost per Completed View: The average amount spent from your campaign budget for each fully watched ad.
  • Cost per Acquisition (CPA): The average expenditure your campaign incurs for every successful acquisition, such as a sale or form signup.
  • Audience Reach: The percentage of unique individuals within your target demographic who have been exposed to your OTT ad.
  • Frequency: The average number of times an individual viewer sees your ad, helping to prevent over-exposure to the same ad.
  • GRP (Gross Rating Point): An age-old metric that quantifies the portion of your target audience that has viewed your ad.
  • CPP (Cost Per Point): A measure that assesses the cost-effectiveness of your ads in reaching your target audience.
  • Cross-Screen Measurement: A metric that allows tracking and measurement of video engagement across various devices, including mobile, TV, and desktop.
  • Target Rating Point: The percentage of your targeted potential customers that view your advertisements, crucial for a successful campaign.

OTT Marketing Best Practices

Over-The-Top (OTT) marketing represents a crucial avenue for brands to engage with their audiences in today’s digital world, particularly as more consumers transition to streaming services. Implementing effective practices in your OTT campaigns can enhance your reach, drive engagement, and boost conversions.

  • Know Your Audience: To create a successful OTT campaign, start by understanding who your target audience is, and tailor your content to appeal to them.
  • Leverage Audience Segmentation: Use demographic, geographic, and behavioral data to segment your audience and deliver personalized ads.
  • Create High-Quality Content: Ensure your ads are well-produced and engaging to capture and maintain viewers’ attention. Don’t cut corners on content quality.
  • Opt for Cross-Platform Advertising: Reach your audience across multiple devices and platforms to boost the overall exposure of your campaign.
  • Measure and Optimize: Regularly track and measure the performance of your campaigns to identify what’s working and what’s not, and optimize accordingly.
  • Include a Clear Call-to-Action (CTA): Make sure each ad includes a compelling CTA to encourage viewers to take the desired action.
  • Make Ads Contextually Relevant: If possible, align your ads with the content being streamed to increase relevance and viewer engagement.

OTT Advertising Examples

There are plenty of great examples of OTT ads that companies use for their performance marketing campaigns. Take a look at a few of our favorites!

MNTN

The first OTT example is from MNTN and features our Chief Creative Officer, Ryan Reynolds. Yeah, we’re a little biased, but that’s because we use our own OTT advertising platform to promote our business—because it works. Check it out!

Rumpl

Rumpl decided to give OTT advertising a whirl with this fantastic commercial pitching their super fashionable and super warm blanket created from recycled materials. It’s a great advertisement that immediately pulls you in and speaks directly to the soul of the adventure-bound traveler.

Replacements

For lovers of fancy and elegant dining table decor, Replacements is for you. This OTT example sticks to a tried and true formula of explaining a common problem, providing a solution, pitching the value proposition, and doing so in under 30 seconds. Short and sweet, just how viewers like it.

1Password

What the heck, let’s do another example with Ryan Reynolds. You have to admit, he’s a pretty fun guy. This OTT ad features 1Password, an advanced cybersecurity password manager to keep all your digital data safe. It’s another funny and memorable video creative that gets right to the point.

OTT Advertising Platforms: Final Thoughts

As you can imagine, we’ve only scratched the surface here, and our team is ready to answer any further questions you may have about OTT marketing and the benefits of OTT advertising platforms like MNTN Performance TV.

If there’s something you’d like to clarify further, or if there are any challenges you’re facing in your current digital campaign strategy, we’re here to help. Start by signing up for our CTV/OTT report below!